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MacLellan: The Columbia real estate market — 2022 vs. last year vs. pre-pandemic – Columbia Daily Tribune

Workers build a new home near Tamarack Drive in June.

It struck me that it might be interesting to compare the local housing market to last year and the pre-pandemic year of 2019.

Clearly, we have been in a seller’s market that has changed considerably over recent years, primarily because of the pandemic. A couple of other critical factors in this equation have been the doubling of mortgage rates and inflation.

First of all, let’s look at this year versus last year. The market has slowed, but let’s see what the numbers tell us:

Jeff MacLellan

2022 vs. 2021

Through the month of July, the Columbia Board of Realtors accounted for 1,440 homes sold. That compared to 1,546 homes sold last year, a decrease of 106 homes, or 7%.

That number is not bad considering the robust increase in home values (more on this later), rising mortgage rates and limited inventory.

When breaking down the sales between existing homes and new construction, we see that existing home sales this year amounted to 1,245 versus last year of 1,374. Those numbers represent a decrease in existing home sales of 129 homes, or 9%. When looking at new construction homes, last year 232 were sold through July versus 195 this year. That represents a decrease of 37 new construction home sales, a decline of 16%.

It makes sense that new construction dropped more than existing home sales as the steep inflation hit building expenses like lumber, labor, petroleum-based products like PVC pipe, steel, copper, etc.

When looking at home prices, the average single-family home sales price in July of last year was $288,625 versus this year of $327,553. That represents an increase of $38,929, or 13.5%.

When looking at the price increase for existing home sales, we find that last year the average existing home sale in July was $285,078 versus this year of $320,248, an increase of $35,170, or 12.3%.

When looking at the sales price of new construction homes, last year the average price was $314,814 versus this year of $412,292, an increase of $97,498 or 31%. Clearly, inflation had a whopping effect on new construction.

Other housing statistics of interest include number of days on the market, which was constant with last year at 13 days, though the average for the year last year was 22 days and through the month of July this year it is 18 days. The months supply of inventory has crept up slightly, as last year in July it was 1.11 months and this year it is 1.38 months.

When you look at year-to-date numbers, last year’s months of inventory average was .84. So far this year, the average is 1.04, an improvement but still low by historical standards.

2022 vs. pre-pandemic

Through the month of July, the Columbia Board of Realtors sold 1,440 homes this year compared to the pre-pandemic year of 2019, when it sold 1,462 homes. Home sales during the pre-pandemic year of 2019 were a difference of 22 homes higher, or 1.5%, hardly a significant difference.

When breaking down the sales, this year the existing home sales amounted to 1,245 compared to 1,252. Again, a difference of 7 homes is hardly statistically significant.

New home sales this year have amounted to 195 while in the pre-pandemic 2019 they amounted to 206. Again, not a big difference, particularly with the large increase in building costs.

When looking at home prices, we have a significant difference. The average price of a single-family home sold in 2019 was $229,526. That number increased to $327,553 in 2022, a very significant increase of $98,027, or 42.7%.

Never in my conscious lifetime have we seen price appreciation like that.

Other housing statistics of interest include days on the market, which are averaging 18 days so far this year versus an average of 60 days in 2019; and months supply of inventory, which is averaging 1.04 so far this year, versus months inventory that averaged 3.6 in 2019, a full 2.6 months higher.

Conclusions

In summary, the housing market for most price ranges is still good, though clearly headed back to more normal levels prior to the pandemic. Most numbers reflect a slowdown when comparing this year with last, though home prices are up 13.5%.

New construction prices are up considerably, reflecting the inflationary environment, and I don’t see that changing anytime soon, though some commodity prices are down. Days on the market are about the same as last year, though I would expect those to tick higher in coming months. Inventories seem to be improving slowly.

When looking at pre-pandemic numbers, the housing market is still better than it was then. The big differences come in the price of a home, up 43%; days on the market (60 then versus 18 today); and months of inventory (3.6 then versus 1 today). These trends are roughly the same as the national trends.

Looking forward, I would expect mortgage interest rates to stabilize at this level, perhaps even go lower; price increases to moderate but not come down given the deficit in single-family housing nationwide; and the inventories to increase slightly over time.

What happens with inflation and a potential recession in the economy will weigh heavily on the housing market.

Jeff MacLellan is retired from Landmark Bank. He spent 37 years in banking and has been tracking local economic indicators since he came to Columbia in 1987.

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